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Use Tax Questions and Answers

This series of questions and answers refers specifically to the use tax incurred on the purchase of general merchandise, food, and medical appliances that are not required to be titled or registered with another state agency. For items that are required to be titled or registered with another state agency, such as vehicles, watercraft, and aircraft, use tax is due and can be paid on the appropriate forms. See instructions for Form RUT-25, Vehicle Use Tax Transaction Return, Form RUT-25-LSE, Use Tax Return for Lease Transactions, Form RUT-50, Private Party Vehicle Use Tax Transaction Return, and Form RUT-75, Aircraft/ Watercraft Use Tax Transaction Return. If you need to obtain Form RUT-25, RUT-25-LSE, RUT-50, or RUT-75 prior to registering the item, you can request copies be mailed to you by emailing our mail room or by calling the Illinois Department of Revenue's 24-hour Forms Order Hotline at 1-800-356-6302. Do not make copies of the forms prior to completing. These forms have unique transaction numbers that should not be duplicated. Doing so could delay processing.

What is use tax?

Use tax is a form of sales tax designed to distribute the tax burden fairly among consumers and assure fair competition between in-state and out-of-state businesses. Illinois, like most other states, imposes use tax on the privilege of using goods within their borders as a complement to sales taxes. This tax applies to individuals, businesses, and organizations. Illinois law requires you to pay tax at Illinois rates on purchases you make for use or consumption in Illinois

when you buy goods from businesses located outside Illinois and bring them into Illinois or

when you have the goods delivered to you from businesses located outside Illinois.

Note: If you bought or acquired cigarettes from another state or country for use in Illinois, you also owe Cigarette Use Tax and must complete Form RC-44. For your convenience, Illinois (sales) Use Tax, which is also due on the purchase of cigarettes, can be paid together with Cigarette Use Tax on Form RC-44.

Do I owe Illinois Use Tax?

You owe Illinois Use Tax if you purchase an item

for use or consumption in Illinois,

from an out-of-state retailer who charges no Illinois Sales Tax or charges sales tax at a rate lower than the Illinois rate, and

on which sales tax would normally be collected if you bought it from a retailer in Illinois.

Examples include

purchases from an internet site that does not charge Illinois Sales Tax;

catalog purchases from an out-of-state retailer who does not charge Illinois Sales Tax;

purchases through an out-of-state home shopping television network that does not charge Illinois Sales Tax; and

items purchased while you were

in another state from a retailer who charged sales tax at a lower rate than the Illinois rate or

in a foreign country.

In addition, if you purchase an item for use or consumption in Illinois from an Illinois retailer and you do not pay tax to the retailer, you owe Illinois Use Tax.

Why should I voluntarily pay use tax?

If you use goods in Illinois that were purchased tax free or at lower rates outside Illinois, you owe use tax to the department. If you do not pay, it is unfair to Illinois retailers, consumers, and taxpayers in the following ways:

Illinois retailers, who must charge sales tax, are put at a competitive disadvantage as compared to out-of-state retailers, who charge no sales tax, or charge tax at rates less than Illinois rates.

Illinois must make up these lost revenues or curtail state services provided to consumers and taxpayers.

Illinois is aggressively focusing upon collecting this tax.

Illinois gathers sales information from other states and bills Illinois residents for unpaid tax, penalty, and interest.

Illinois gathers information on overseas purchases from the U.S. Customs Service.

Note: By voluntarily paying, on time, all of the Illinois Use Tax you owe, you will avoid being billed for unpaid tax and additional penalty and interest charges.

The Illinois Department of Revenue can assess use tax owed by taxpayers who do not pay voluntarily. For taxpayers who do not have records to document their use tax liability, the department will estimate liability. Taxpayers have the right to refute the department’s estimates by following established protest procedures.

What are the Illinois Use Tax rates?

Illinois Use Tax rates are 6.25 percent of the purchase price of general merchandise and 1.00 percent of the purchase price of qualifying food, drugs, and medical appliances.

The 1.00 percent rate applies to

food that has not been prepared for immediate consumption (such as most food sold in grocery stores, excluding hot foods, alcoholic beverages, candy, and soft drinks),

prescription medicines and nonprescription items that claim to have medicinal value (such as aspirin and cough medicine, excluding nonprescription grooming and hygiene products), and

medical appliances that replace a malfunctioning part of the human body (such as wheel chairs and hearing aids).

When is my use tax due?

The use tax due date is based on how much use tax you owe.

If your total tax liability for the year is

$600 or less, you may pay the tax for the entire year (January 1 through December 31) by filing

Form ST-44, Illinois Use Tax Return, on or before April 15 of the following year; or

Form IL-1040, Individual Income Tax Return, on or before April 15 of the following year (for tax years ending December 31, 2010 and after).

Greater than $600, you must pay the tax by the last day of the month following the month in which the purchase was made by filing Form ST-44, Illinois Use Tax Return.

Note: If you bought or acquired cigarettes from another state or country for use in Illinois, you also owe Cigarette Use Tax. Illinois (sales) Use Tax and Cigarette Use Tax can be paid together by filing Form RC-44, Illinois Cigarette Use Tax Return, no later than 30 days after you purchase or acquire cigarettes for use in Illinois.

How do I pay Illinois Use Tax?

Generally, individuals, organizations, and unregistered businesses must report and pay use tax directly to the Illinois Department of Revenue using Form ST-44, Illinois Use Tax Return.

You may report and pay any use tax due for purchases you made during that particular filing year if the amount of use tax due for the year is not over $600.

Note: If the amount of use tax due on your IL-1040 for the year is over $600, you will need to file and pay using Form ST-44.

If you are a registered Illinois retailer or serviceperson, and currently file Form ST-1, Sales and Use Tax and E911 Surcharge Return, you must report and pay use tax on that form.

Businesses that purchase items tax free for use or consumption in Illinois should use the return whose liability period corresponds to the purchase date of the items for which use tax is due.

Businesses that purchase items tax free for resale and later remove these items from inventory for use or consumption in Illinois should use the return whose liability period corresponds to the date the item was removed from inventory.

What type of payment is acceptable to pay my use tax?

Payments can be made, with the filing of a return, by

Cash,

Cash is only accepted at the following two Illinois Department of Revenue locations:

Where do I get my IL-PIN?

Your IL-PIN is the same 8-digit number that the department assigned for you to use in filing your IL-1040 or paying your individual income tax through our website. If you do not know your IL-PIN, go to our Pin Inquiry System to see if an IL-PIN has been assigned to you, or call 1 800 732-8866.

The use tax line my IL-1040 states “Do not leave blank”, what amount do I put on it if I am not reporting use tax on my IL-1040?

If you do not have use tax to report on your IL-1040 or you are filing and paying your use tax on Form ST-44, write “0” on the use tax line on your IL-1040.

How do I correct my IL-1040 if I have changes to my use tax liability?

To correct your use tax reported on your IL-1040

Send written correspondence to

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19084
SPRINGFIELD IL 62794-9084

Fax correspondence to 217 557-5353

How do I correct my use tax reported on my IL-1040 if I received a Return Correction Notice?

Send a copy of the Return Correction Notice along with the requested documentation and a signed, written request detailing the correction requested.

Send written correspondence to

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19084
SPRINGFIELD IL 62794-9084

Fax correspondence to 217 557-5353

Can I correct my use tax using the IL-1040-X?

No, you should send in a signed, written request detailing the correction requested. If you are filing an amended return for a separate reason, attach the completed IL-1040-X and any attachments to the back of the use tax correction request. Both should be mailed to

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19084
SPRINGFIELD IL 62794-9084

Do I owe use tax on items I purchased for my exempt organization?

No. Items purchased for use in Illinois by an exempt organization in support of its organizational purpose qualify as sales-tax exempt purchases if the exempt organization has applied for and received an exemption identification number (“E” number) from the Illinois Department of Revenue. Examples of exempt organizations are

units of government,

churches,

charities,

schools,

county fair organizations, and

certain senior citizen organizations

Do I owe use tax on items I purchased at a garage sale?

No. Items purchased for use in Illinois from persons who make isolated or occasional sales and who are not engaged in the business of selling tangible personal property at retail are not subject to use tax.